Tesco is going global with e-commerce

With 6,234 stores in 13 countries and annual sales of 72 billion pounds ($116 billion), U.K. retailer Tesco is well established in the global marketplace. But until recently the supermarket chain operator only sold to consumers on the web in its home market of the U.K.

Tesco, No. 3 in the Internet Retailer Top 400 Europe, took its first step into selling goods electronically in 1984 with a service that enabled registered members to buy a limited range of products via a television interface, Sam Hill, lead solution architect at Tesco Plc., told attendees at the e-Commerce Expo in London this week.

That small service, which had just 450 users, has now grown into a booming e-commerce business. Tesco's U.K. online sales totaled around 2 billion pounds ($3.2 billion) for its fiscal year ended April 5, 2012. And, the web is only growing for Tesco. Its U.K. web sales rose 11% in the first six months of this year.

Tesco has invested heavily in e-commerce, offering a mobile app and site for the U.K. and a service in 70 stores across Britain that allows customers to order online from a PC or mobile device and collect their groceries in store. And now it’s set its web sales sights on countries beyond the U.K. In September 2010, the retailer outlined an aggressive plan to roll out web ordering and delivery in major cities in the Czech Republic (Prague) in January 2012, several urban centers in Poland in July and Slovakia (Bratislava) in October, with plans to further expand into China, India, Malaysia, South Korea, Thailand, Hungary, Republic of Ireland, Turkey and the United States in the near future. So far it is on target with its plans.

Rather than build a separate e-commerce platform for each country, Tesco decided to build a template that could be used for all international sites, Hill says. It built the platform in-house using a team of 100 in the U.K. and India.

For the new platform to work across borders, the designers had to overcome many challenges, Hill says.

For example, each region has different regulations for how it can store and use consumer data, Hill says. In some countries, e-retailers are required to encrypt all customer data. In others they have to disclose to consumers details about how they will use and store data. Tesco had to develop a platform that could accommodate the laws for each region.

Collecting payments was another issue. "MasterCard and Visa are not as widely used globally as one would imagine," Hill says. "There are many alternatives, and in some countries customers are still nervous about entering credit card details online."

To get around this, the platform accommodates a range of local payment methods. Tesco also enables consumers in foreign countries to pay when they receive their goods.

Tesco, which fulfills the web orders through local stores in each region, also had to translate sites into local languages. The language is automatically selected by the URL the consumer types in. For example, www.itesco.sk/ shows the site in Slovakian, but consumers can always change the language back to English if they prefer.

Visitors to the sites can choose from around 17,000 products in each country. Tesco says it has sold around four million products through the new global e-commerce platform so far.

Tesco plans to expand the e-commerce platform to reach consumers in Asia in the next few months, including shoppers in Malaysia and Thailand. "That will present more unique challenges," Hill says. "Our stores in that region have some unfamiliar products including exotic items such as live frogs, turtles and eels, and we haven't quite worked out the logistics of how we are going to deliver those items yet."